Ex-Barclays director accused by U.S. of illegal tips to plumber

NEW YORK (Reuters) - A former director at Barclays Plc was arrested on Tuesday on U.S. charges that he provided inside information about impending mergers he learned about at the bank to a plumber, who used the tips to make $76,000 (£52,488) illegally.

Former Barclays Plc director Steven McClatchey leaves the federal courthouse following his arrest earlier in the day on insider trading charges, in Manhattan, New York, U.S. REUTERS/Nate Raymond

Steven McClatchey, 58, was charged in a criminal complaint filed in Manhattan federal court with conspiracy, wire fraud and securities fraud after the plumber, Gary Pusey, secretly pleaded guilty on Friday and agreed to cooperate with authorities.

McClatchey, who worked at the British bank in its Manhattan offices from December 2008 to December 2015, was arrested on Long Island, where he resides. He was released later in the day following a court hearing.

McClatchey’s lawyer, Steven Kartagener, declined to comment. An attorney for Pusey, 47, did not respond to requests for comment.

The charges were announced by Manhattan U.S. Attorney Preet Bharara, who has overseen an insider trading crackdown that has resulted in 102 people being charged and 78 being convicted since 2009.

That push has suffered recent setbacks following a 2014 appellate ruling that limited the scope of insider trading laws, resulting in charges being dropped or dismissed against 14 defendants.

According to the complaint and a related U.S. Securities and Exchange Commission lawsuit filed on Tuesday, McClatchey was responsible for tracking all potential deals involving the bank.

He began tipping Pusey, a friend he met through boating, as early as 2013, enabling the plumber to execute trades ahead of merger announcements involving 11 companies, including Forest Oil Corp and PetSmart Inc.

In exchange, Pusey paid thousands of dollars in cash to McClatchey, sometimes placing cash in a gym bag that McClatchey brought with him to a marina in Freeport, New York, and provided free bathroom remodeling services, authorities said.

While Barclays was not identified by name in court papers, the bank confirmed it was the British investment bank that had employed McClatchey.

In a statement, Barclays said it has cooperated fully with authorities, including the Federal Bureau of Investigation and the SEC “since learning about this incident involving a former employee.”

The cases in the U.S. District Court, Southern District of New York, are U.S. v. McClatchey, No. 16-mj-3433, and Securities and Exchange Commission v. Pusey, No. 16-cv-04029.